This Thesis Got An 'A' in CDOs

Barnett-Hart's Study Of the Roots of the Crisis Wins the Praise of Lewis

Buried in the acknowledgments of the just released "The Big Short," Michael Lewis's yarn about the financial crisis, the author praises A.K. Barnett-Hart, a Harvard undergraduate whose thesis about the market for subprime mortgage-backed CDOs was more interesting than any Wall Street research on the subject.

Intrigued, Deal Journal tracked down Ms. Barnett-Hart, now a 24-year-old financial analyst working at a large New York investment bank. Her paper, "The Story of the CDO Market Meltdown: An Empirical Analysis," was handed in a year ago this week and was awarded summa cum laude and the Harvard Hoopes Prize for outstanding scholarly work.

Ms. Barnett-Hart says she wasn't the most obvious candidate to produce such scholarship. She grew up in Boulder, Colo., the daughter of a physics professor and full-time homemaker. She deferred admission at Harvard to attend Juilliard, where she was accepted into a program studying the violin under Itzhak Perlman. After a year, she headed to Cambridge, Mass. There she randomly took "Ec 10," a legendary introductory economics course taught by Martin Feldstein.

"I thought maybe this would help me, like, learn to manage my money or something," said Ms. Barnett-Hart. She enjoyed how the subject mixed current events with history, got an A (natch) and declared economics her concentration.

Her interest in CDOs stemmed from a summer job at an investment bank in the 2008, between junior and senior years. During a rotation on the mortgage securitization desk, she noticed everyone was in a complete panic. "The stock market was collapsing and these securities were affecting the broader economy," she said. "At that moment I became obsessed and decided I wanted to write about the financial crisis."

When she approached professors at Harvard with an idea of writing a thesis about CDOs and their role in the crisis, "everyone discouraged me because they said I'd never be able to find the data," she said. "I was urged to do something more narrow, more focused, more knowable. That made me more determined."

She emailed scores of Harvard alumni. One pointed her toward LehmanLive, a comprehensive database on CDOs. She received lots of other leads. She put together charts and visuals, holding off on analysis until she could see patterns.

"It was a classic example of the innocent going to Wall Street and asking the right questions," said Mr. Lewis, who in his 20s wrote "Liar's Poker," considered a defining book on Wall Street culture. "Her thesis shows there were ways to discover things that everyone should have wanted to know. That it took a 22-year-old Harvard student to find them out is just outrageous."

Why then seek out a Wall Street job?

"How would Wall Street ever change, I thought, if the people that work there do not change?" she wrote in an email. "What these banks needed is for outsiders to come in with a fresh perspective, question the way business was done."

Correction & Amplification

A.K. Barnett-Hart is a woman. A previous version of the this article incorrectly referred to her as Mr. in one reference.